Friday, July 13, 2007

The Wall Street Journal says Kevin Hassett has discovered the Laffer curve, but I
think these data might say something else. Here's the picture from the editorial
where they are making their usual plea for more tax cuts:

The blue line is supposed to be the Laffer curve, but this is far from compelling. Since it looks like all that's been
done here is to draw a line through an outlier, Norway (an outlier that in
other contexts we are told to ignore because it is an outlier, e.g. see
below), and since this is clearly not the best fitting line to these data,
here's another possibility:

I haven't actually run the regression, but it looks clear to me that revenues
rise with tax rates, and the fit also looks better than in the first graph. Toss out
Norway, and the fit looks even better (and to
quote The Economist blog on this point, "Throwing out Norway...").

LAFFING IT UP....The Wall Street Journal editorial page is really getting desperate. Even for them. In an editorial today they present data on corporate tax rates around the world and, like those people who find an outline of the Virgin... [Read More]

This (the chart) is the dumbest thing I've ever seen, and I've seen a lot. You don't have to be an economist. All you have to be is somebody who knows what a scatter diagram is. Just for fun, I... [Read More]

This (the chart) is the dumbest thing I've ever seen, and I've seen a lot. Check out that curve; it's a gotdam roller coaster! (Original WSJ editorial here.) For fun I did a regression line for similar data (same year,... [Read More]

Even by the standards of the WSJ editorial page, which has a relationship to truth analogous to the relationship that Ebola has to French kissing.
...
Deliberately and transparently dishonest editorials are being given legitimacy because of t... [Read More]

Link comes from Cato-at-Liberty.
Several months ago, Smith and Engles already posted on Germany attempting to get the European Union to institute a minimum corporate tax to force Ireland to increase their corporate tax. Not sure what happened to chang... [Read More]

The latest nonsense from the WSJ on the alleged Laffer curve apparently also irked Bruce Bartlett who emailed me an OECD document of tax rates in various nations from 2000 to 2006. I think Bruce was hoping someone could do a proper regression – but not... [Read More]

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Yet Again, Tax Cuts Do Not Pay for Themselves

The Wall Street Journal says Kevin Hassett has discovered the Laffer curve, but I
think these data might say something else. Here's the picture from the editorial
where they are making their usual plea for more tax cuts:

The blue line is supposed to be the Laffer curve, but this is far from compelling. Since it looks like all that's been
done here is to draw a line through an outlier, Norway (an outlier that in
other contexts we are told to ignore because it is an outlier, e.g. see
below), and since this is clearly not the best fitting line to these data,
here's another possibility:

I haven't actually run the regression, but it looks clear to me that revenues
rise with tax rates, and the fit also looks better than in the first graph. Toss out
Norway, and the fit looks even better (and to
quote The Economist blog on this point, "Throwing out Norway...").